What Is FLoC and Why Is It Important For Your Business?.
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What Is FLoC and Why Is It Important For Your Business?

Google ended the development of FLoC in 2021. In January 2022, Google's Privacy Sandbox initiative released the Topics API proposal to address interest-based advertising. We've left this article as-is to provide historical context for the journey to first-party cookies coming in 2024.

With the transition away from third-party cookie-based tracking, advertisers are looking for new ways to identify their audiences and provide personalized and targeted ad campaigns. Google recently decided to track users in a new way ‚ÄĒ by using FLoC.

What is FLoC, and how does it work? And more importantly, is it something that impacts your business as marketers look to transition away from third-party tracking? Read on to learn everything you need to know about FLoC. 

What Is FLoC?

FLoC stands for Federated Learning of Cohorts. It is a new advertising data collection tool from Protocol. Google switched to this tracking tool because it is said to be more private than cookies while still effective for personalized advertising. In short, rather than tracking a user individually (how third-party cookies collected data for advertising), FLoC assigns each user to a specific group based on shared interests. 

Why Is It Important?

Because of increased privacy laws, marketers need to find new ways to collect user data for advertising purposes. Advertising is key to driving website traffic, but personalized advertising is critical to even more success. Because consumers prefer to see ads specific to them, marketers need a way to gather information about a person to know what to show them to improve the customer experience. 

Advertisements are more valuable when they are segmented and relevant. As a result, businesses see increased traffic and sales from this type of advertising. However, while consumers want personalized content, they also want to ensure their information is kept private. Because of this, browsers such as Firefox, Safari, and Chrome are no longer using third-party cookies to collect and analyze user information and individual browsing behavior. FLoC aims to provide the same level of individualization through data collection with increased privacy for the consumer.

How Does It Work?

FLoC organizes groups of people into ‚Äúcohorts.‚ÄĚ Everyone in a cohort shares similar browsing habits and online activities. When a browser vendor utilizes FLoC, it creates a mathematical model that establishes thousands of cohorts. Each cohort corresponds to groups with similar web browsing history and is given a specific number so it can easily be identified as they browse other websites.¬†

When a consumer shops online, their browser and each site they visit ‚Äúcommunicate‚ÄĚ the consumer‚Äôs cohort number so the site can accurately collect and analyze informational data. Say, for example, a user in cohort 1647 browses bathing suits. The site will record that a user in cohort 1647 showed an interest in bathing suits and compare this information against others in the same cohort and other cohorts.¬†

An advertiser observes the activity of various cohorts on their site and shares this information with an ad tech platform. Then, when a user from cohort 1647 visits another website, their browser provides the new website with the cohort number. The website analyzes the information and sees users in cohort 1647 have shown an interest in bathing suits. Then, the ad tech platform chooses an ad relevant to that cohort to display on the new website. 

What Is It Used For?

FLoC is designed to show ads to consumers based on their browsing history, which determines their cohort number. This allows for relevant ad content to be shown to the consumer without collecting third-party information. Additionally, webpages can track and analyze cohort data to deliver relevant content to specific cohorts who visit their website. 

Can a User’s Cohort Number Change?

Absolutely. As people visit new websites each week, their cohort will change based on their most recent activity. Because a cohort is a collection of online activity rather than a collection of specific people, users can float in and out of cohorts as their online activity changes. Because the characteristics of each cohort remain the same (and only the people in them change), they will still display relevant ad content to the right people at the right time.

How Is FLoC More Private than Third-Party Cookies?

While there are individual users in each FLoC cohort, they cannot be identified. When browsers and sites work together to identify a user’s interests, they do so using only the cohort number and not an individual user ID. Additionally, the information collected to assign a user to a cohort is kept local on a browser or device and is never uploaded to an outside or additional site. 

How Can a Business Use FLoC?

Advertisers can include the API code for FLoC on their websites. When they do this, they begin to gather information about specific cohorts that can then be shared with their ad tech platform because the ad tech platform can deliver advertising. With information about each cohort, the ad platform chooses relevant advertisements to show individuals as they browse other websites. Therefore, to effectively use FLoC, you need to have your web developer include the FLoC API on your webpage and set up a partnership with an ad tech platform to deliver ads based on the cohort information you collect. Just as a website can opt into using FLoC to collect user information, they can also opt out if they are not interested in collecting data using this system. 

As advertisers seek to find new ways to collect user information to provide personalized ads to interested users, new tools like FLoC will fill the gap. However, even FLoC is not without privacy concerns. Browser fingerprinting, in which pieces of data collected from a browser are compiled to establish a unique identifier, is more likely. This is because, with only thousands of people in a cohort, it takes less to distinguish a particular user. While FLoC is still in its infancy, and there are proposals to combat such privacy issues, when and how it comes together are still unknown.